According to analysts at Standard Chartered, for the Indian economy, the weather is back in focus given the country’s significant economic dependence on rain.
“With 50% of crop area lacking access to irrigation facilities, monsoon rains are crucial to supporting agricultural output and rural incomes. Near-normal rainfall over the past three years supported strong 3.8% average growth in agricultural output and helped tame food inflation to an average 2.5% during FY17-FY19 (FY19 ended March 2019).”
“The Indian Meteorological Department’s (IMD’s) first long-range forecast of a higher possibility of a near-normal monsoon in 2019 provides relief. IMD assigns a 39% probability to near-normal rains this year, as it expects El Niño conditions to weaken as the monsoon progresses. However, the projection of below-normal rains by private forecaster Skymet keeps us cautious.”
“Additionally, the Australian Bureau of Meteorology (ABoM) sees a 70% chance of El Niño developing in 2019, around triple the normal likelihood. Empirical analysis shows that India’s monsoon is deficient or below normal in 65% of El Niño years. It is too early for an accurate weather prediction this year. In some instances, ABoM and IMD full-year weather forecasts released in April have been inaccurate.”
“Greater clarity on monsoon activity should emerge by the first week of June, when IMD will release its second round of forecasts, including precipitation projections by month and geographic area.”